What economic prospects for Guatemala are there for the rest2023? Will the world fall into recession, and how would Guatemala be affected? Is the country resilient? At the moment, the world situation is uncertain. Several economic experts attest that we are already in a general recession. Others say that we will enter one early next year. Yet, still, others tell us that there will not be a recession as such, just a general economic shock.
Economic prospects for Guatemala and the rest of the region project moderate GDP growth
In the economic sphere, the International Monetary Fund (IMF) forecasts that the economic prospects for Guatemala will have a GDP growth rate of 3.2% in 2023. This figure 1.8% less than optimal for an appropriate growth rate for a developing nation. Similar rates are expected to be attained by other countries in the region. This includes Costa Rica at 2.9%, the Dominican Republic at 4.5%, El Salvador at 1.7%, Honduras at 3.5%, and Nicaragua at 3%. This decline in economic activity will cause various crises and disruptions to be experienced this year that will slow down the economy. Nevertheless, it is expected that if the countries adopt the correct policies, they will be able to exceed these numbers and achieve optimal growth that will result in positive economic prospects for Guatemala and the region as a whole.
Concerning the inflationary crisis that is currently being experienced in many countries, some experts expect prices to begin to stabilize at the beginning of the next year. It is anticipated, however, that rates will not return to the low level that many countries’ economies have enjoyed in recent years. The IMF forecasts that in 2023 Guatemala will end with an inflation of 5.6%. In October 2021, this number was expected to be 4.2%, but given the current situation, it increased. Other regional inflation rate forecasts include Costa Rica at 6.4%, the Dominican Republic at 5.7%, El Salvador at 2.7%, Honduras at 8.5%, and Nicaragua at 7%. The Bank of Guatemala (BANGUAT) is expected to achieve anchor inflation expectations in 2023 when it begins to see a significant drop, reducing national uncertainty and improving economic conditions. This is critical for bettering economic prospects for Guatemala and attracting investment and international business.
A slowdown in trade
For trade, a slowdown is expected this year. For Guatemala, the IMF forecasts a 5.9% growth in exports, lower than the 6.1% that was previously expected. However, exports are expected to grow positively for the region as a whole. Most noteworthy is that the Dominican Republic has the highest expected growth at 9.4%.
Concerning imports, general growth is expected in the region with figures of around 1% and 6%. The IMF expects the economic prospects for Guatemala to grow its imports by 1.3%. This figure is lower than countries like Costa Rica, the Dominican Republic, and Honduras, which are all expected to be above 4.3%.
The Foreign Direct Investment (FDI) goal that is expected for Guatemala in 2023 is US $1.7 billion. Will the country be able to exceed the investment goal? It is believed that the answer to this question is “yes.” The efforts of the Ministry of Economy (MINECO) and the private sector will be the key to attracting more and better investment to the country. Guatemala seeks to diversify its investment sectors by taking advantage of the nearshoring and friendshoring opportunities offered through economic cooperation with the United States. Programs such as Guatemala no Se Detiene, or “Guatemala Does Not Stop,” are essential to attracting foreign direct investment.
The Bank of Guatemala has been known for responsible monetary policy
Economic prospects for Guatemala predict that a drop and stabilization of the country’s exchange rate is also expected. This will be possible if BANGUAT maintains the responsible monetary policy for which it has recently been known.
Economic prospects for Guatemala must continue on the right path. This can be assured by promoting initiatives that attract and create investment and employment, which leads to greater industrialization. It is proven that the Guatemalan industry is the one that pays regionally competitive salaries. Therefore, by investing in it, more and better jobs are generated. Consequently, the quality of life of the Guatemalan citizenry improves. The development process is, at times, slow, but, on the whole, economic prospects for Guatemala remain positive. The country is expected to improve its economic conditions in 2023, especially in an important election year.
